Sonic Hedgehog is a morphogen. To fulfill this role, it is necessary that it is able to travel many cell diameters away from its source of synthesis through the responding tissue. This requirement appears to be in conflict with the biological properties of Shh; it both contains an Acyl and a cholesterol moiety, which severely curtail its solubility in a hydrophilic intercellular environment. Although a functional, soluble hexameric form of Shh has been identified, medium conditioned by Shh expressing cells do not accumulate Shh to levels high enough to elicit a response in neural plate explants. However, when such responsive tissue is in contact with Shh producing cells, long-range Shh signaling can be observed in the explant, indicating that Shh is actively transported in the plane of the responding tissue. It is hypothesized that this long-range transport is mediated in part by transcytosis, which is supported by observation in Drosophila that export of cholesterol-associated Shh homolog Hedgehog (Hh) requires the activity of a dedicated molecule, Dispatched (Disp), while the uptake of Shh and Hh is mediated by the Disp homolog Patched (Ptc). In addition, the Ptc1-mediated trafficking of Shh into late endosomes is required to initiate the Shh response. To complete transcytosis in these responding cell it is necessary that Shh is transported from the late endosomes to the cell surface and made available to neighboring cells, and it is hypothesized that this is mediated by Disp. The hypotheses will be tested determining if Ptc1-mediated and Disp1-mediated trafficking of Shh are required in concert for long-range signaling. Determine the long-range signaling efficacy of alternatively anchored forms of Shh. It will be determined if the acidic environment in late endosomes favors Shh binding to Dispatched, while the neutral environment in the intercellular space allows Shh to bind to Ptc1, creating a continuous chain of events resulting in transcytosis. The requirement for intracellular transport in generating a long-range signal will be tested by blocking the function of Rabs and Dynamin. The Shh response coupled to transcytosis allows the generation of a graded Shh response, in a tissue actively responding to Shh, without the requirement for long-range transport in the intercellular space, and provides an explanation for the unusual activities of Ptc1 and Disp1. Better understanding of the mechanism by which the long-range Shh signal forms is important. Inappropriate activation of the Shh response is the cause of a wide variety of cancers, including a high fraction of pancreatic tumors, while normal Shh signaling is required for the development of many organ systems.